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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

Commission file number: 001-37372

Graphic

Collegium Pharmaceutical, Inc.

(Exact name of registrant as specified in its charter)

Virginia
(State or other jurisdiction of
incorporation or organization)

03-0416362
(I.R.S. Employer
Identification Number)

100 Technology Center Drive
Stoughton, MA
(Address of principal executive offices)

02072
(Zip Code)

(781) 713-3699

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

COLL

The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

  

Accelerated filer

  

Non-accelerated filer

  

Smaller reporting company

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 

As of July 31, 2022, there were 34,126,205 shares of Common Stock, $0.001 par value per share, outstanding.

Table of Contents

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

4

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

37

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

46

Item 4.

Controls and Procedures

47

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

48

Item 1A.

Risk Factors

48

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

66

Item 3.

Defaults Upon Senior Securities

67

Item 4.

Mine Safety Disclosures

67

Item 5.

Other Information

67

Item 6.

Exhibits

68

Signature

69

2

Table of Contents

Forward-Looking Statements

Statements made in this Quarterly Report on Form 10-Q that are not statements of historical or current facts, such as those under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “outlook,” “plan,” “potential,” “project,” “projection,” “seek,” “may,” “could,” “would,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning.

Forward-looking statements are inherently subject to risks, uncertainties and assumptions; they are not guarantees of performance. You should not place undue reliance on these statements. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure you that the assumptions and expectations will prove to be correct.

You should understand that the following important factors could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

our ability to commercialize and grow sales of our products, particularly in light of current global challenges stemming from the COVID-19 pandemic;
our ability to successfully integrate the operations of BioDelivery Sciences International, Inc. (“BDSI”) into our organization, and realize projected cost savings associated with the acquisition of BDSI;
our ability to obtain and maintain regulatory approval of our products, and any related restrictions, limitations, and/or warnings in the label of an approved product;
the size of the markets for our products, and our ability to service those markets;
the success of competing products that are or become available;
our ability to obtain and maintain reimbursement and third-party payor contracts with favorable terms for our products;
the costs of commercialization activities, including marketing, sales and distribution;
the rate and degree of market acceptance of our products;
changing market conditions for our products;
the outcome of any patent infringement, opioid-related or other litigation that may be brought by or against us;
the outcome of any governmental investigation related to the manufacture, marketing and sale of opioid medications;
the performance of our third-party suppliers and manufacturers;
our ability to secure adequate supplies of active pharmaceutical ingredients for each of our products, manufacture adequate quantities of commercially salable inventory and maintain our supply chain in the face of global challenges, such as the COVID-19 pandemic;
our ability to effectively manage our relationships with licensors and to commercialize products that we in-license from third parties;
our ability to attract collaborators with development, regulatory and commercialization expertise;
our ability to obtain funding for our business development;
our ability to comply with the terms of our outstanding indebtedness;
regulatory and legislative developments in the United States, including the adoption of opioid stewardship and similar taxes that may impact our business;
our ability to obtain and maintain sufficient intellectual property protection for our products and any future product candidates;
our ability to comply with stringent government regulations relating to the manufacturing and marketing of pharmaceutical products, including U.S. Drug Enforcement Agency (“DEA”) compliance;
our customer concentration, which may adversely affect our financial condition and results of operations;
the accuracy of our estimates regarding expenses, revenue, capital requirements and need for additional financing; and
the other risks, uncertainties and factors discussed under the heading “Risk Factors” in this Quarterly Report on Form 10-Q.

In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this Quarterly Report on Form 10-Q (including the exhibits hereto) might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, even if experience or future developments make it clear that projected results expressed or implied in such statements will not be realized, except as may be required by law.

These and other risks are described under the heading “Risk Factors” in this Quarterly Report on Form 10-Q. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.

3

Table of Contents

 

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited).

Collegium Pharmaceutical, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

June 30,

December 31,

2022

2021

Assets

 

    

 

    

Current assets

Cash and cash equivalents

$

122,722

$

186,426

Accounts receivable, net

197,505

105,844

Inventory

77,769

17,394

Prepaid expenses and other current assets

 

11,778

 

5,879

Total current assets

 

409,774

 

315,543

Property and equipment, net

 

19,965

 

19,491

Operating lease assets

7,257

7,644

Intangible assets, net

647,299

268,723

Restricted cash

2,547

2,547

Deferred tax assets

28,571

78,042

Other noncurrent assets

67

87

Goodwill

130,094

Total assets

$

1,245,574

$

692,077

Liabilities and shareholders' equity

Current liabilities

Accounts payable

$

6,627

$

4,189

Accrued expenses

 

39,704

 

29,214

Accrued rebates, returns and discounts

246,719

196,996

Current portion of term notes payable

120,833

48,353

Current portion of operating lease liabilities

1,211

814

Total current liabilities

 

415,094

 

279,566

Term notes payable, net of current portion

484,853

61,666

Convertible senior notes

140,415

139,966

Operating lease liabilities, net of current portion

 

7,600

 

7,951

Total liabilities

 

1,047,962

 

489,149

Commitments and contingencies (see Note 15)

Shareholders’ equity:

Preferred stock, $0.001 par value; authorized shares - 5,000,000

Common stock, $0.001 par value; authorized shares - 100,000,000; 36,567,830 issued and 34,109,981 outstanding shares at June 30, 2022 and 35,806,119 issued and 33,655,402 outstanding shares at December 31, 2021

 

37

 

36

Additional paid-in capital

 

520,038

 

502,095

Accumulated deficit

 

(274,602)

 

(256,342)

Treasury stock, at cost; 2,457,849 shares at June 30, 2022 and 2,150,717 shares at December 31, 2021

(47,861)

(42,861)

Total shareholders’ equity

 

197,612

 

202,928

Total liabilities and shareholders’ equity

$

1,245,574

$

692,077

See accompanying notes to the Condensed Consolidated Financial Statements.

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Collegium Pharmaceutical, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Product revenues, net

$

123,549

$

82,942

$

207,300

$

170,663

Cost of product revenues

Cost of product revenues (excluding intangible asset amortization)

33,684

15,908

50,016

31,236

Intangible asset amortization

37,501

16,795

56,424

33,590

Total cost of products revenues

 

71,185

32,703

 

106,440

 

64,826

Gross profit

52,364

50,239

100,860

105,837

Operating expenses

Research and development

3,462

3,983

6,392

Selling, general and administrative

 

41,254

 

30,368

 

95,782

61,844

Total operating expenses

 

41,254

 

33,830

 

99,765

 

68,236

Income from operations

 

11,110

 

16,409

 

1,095

37,601

Interest expense

 

(17,761)

 

(5,421)

 

(23,592)

(11,142)

Interest income

5

3

9

6

(Loss) income before income taxes

(6,646)

10,991

(22,488)

26,465

Benefit from income taxes

(1,455)

(61,852)

(4,228)

(62,040)

Net (loss) income

$

(5,191)

$

72,843

$

(18,260)

$

88,505

(Loss) earnings per share — basic

$

(0.15)

$

2.06

$

(0.54)

$

2.52

Weighted-average shares — basic

34,001,553

35,302,608

33,838,638

35,128,144

(Loss) earnings per share — diluted

$

(0.15)

$

1.79

$

(0.54)

$

2.20

Weighted-average shares — diluted

34,001,553

41,286,853

33,838,638

41,251,749

See accompanying notes to the Condensed Consolidated Financial Statements.

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Collegium Pharmaceutical, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Six Months Ended June 30,

2022

    

2021

Operating activities

Net (loss) income

$

(18,260)

$

88,505

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Amortization expense

56,424

33,590

Depreciation expense

1,371

864

Deferred income taxes

(9,410)

(62,649)

Stock-based compensation expense

 

11,827

 

13,395

Non-cash lease expense

429

15

Non-cash interest expense for amortization of debt discount and issuance costs

 

3,435

 

1,795

Changes in operating assets and liabilities:

Accounts receivable

(36,165)

(6,778)

Inventory

17,007

(4,498)

Prepaid expenses and other assets

 

245

 

(1,301)

Accounts payable

 

2,426

 

(2,472)

Accrued expenses

 

(7,659)

 

2,969

Accrued rebates, returns and discounts

(6,538)

(13,330)

Operating lease assets and liabilities

4

Net cash provided by operating activities

 

15,136

 

50,105

Investing activities

Purchases of property and equipment

(569)

 

(1,153)

Acquisition of BDSI (net of cash acquired)

(572,069)

Net cash used in investing activities

 

(572,638)

 

(1,153)

Financing activities

Proceeds from issuances of common stock from employee stock purchase plans

203

358

Proceeds from the exercise of stock options

 

4,806

 

8,274

Payments made for employee stock tax withholdings

(3,893)

(3,929)

Repayment of term notes

(25,000)

(25,000)

Proceeds from term note modification

517,682

Net cash provided by (used in) financing activities

 

493,798

 

(20,297)

Net (decrease) increase in cash, cash equivalents and restricted cash

 

(63,704)

 

28,655

Cash, cash equivalents and restricted cash at beginning of period

 

188,973

 

176,663

Cash, cash equivalents and restricted cash at end of period

$

125,269

$

205,318

Reconciliation of cash, cash equivalents and restricted cash to the Consolidated Balance Sheets:

Cash and cash equivalents

$

122,722

$

202,771

Restricted cash

2,547

2,547

Total cash, cash equivalents and restricted cash

$

125,269

$

205,318

Supplemental disclosure of cash flow information

Cash paid for interest

$

17,752

$

9,348

Cash paid for income taxes

$

6,776

$

876

Supplemental disclosure of non-cash activities

Acquisition of property and equipment in accounts payable and accrued expenses

$

105

$

55

Inventory used in the construction and installation of property and equipment

$

$

516

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See accompanying notes to the Condensed Consolidated Financial Statements.

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Collegium Pharmaceutical, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, in thousands, except share and per share amounts)

1. Nature of Business

Collegium Pharmaceutical, Inc. (the “Company” or “Collegium”) was incorporated in Delaware in April 2002 and then reincorporated in Virginia in July 2014. The Company has its principal operations in Stoughton, Massachusetts. The Company’s mission is to build a leading, diversified specialty pharmaceutical company committed to improving the lives of people living with serious medical conditions. The Company’s portfolio includes the following commercial products: Xtampza ER, Nucynta ER and Nucynta IR (the “Nucynta Products”), Belbuca, Symproic, and Elyxyb.

Xtampza ER

The Company’s first product, Xtampza ER, is an abuse-deterrent, extended-release, oral formulation of oxycodone. In April 2016, the United States Food and Drug Administration (the “FDA”) approved the Company’s new drug application (“NDA”) for Xtampza ER for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. In June 2016, the Company announced the commercial launch of Xtampza ER.

Nucynta Products

In December 2017, the Company entered into a Commercialization Agreement (the “Nucynta Commercialization Agreement”) with Assertio Therapeutics, Inc. (formerly known as Depomed) (“Assertio”), pursuant to which the Company acquired the right to commercialize the Nucynta Products in the United States. In February 2020, the Company entered into an Asset Purchase Agreement with Assertio (the “Nucynta Purchase Agreement”), pursuant to which the Company acquired from Assertio certain assets related to the Nucynta Products (the “Nucynta Acquisition”), including the license from Grünenthal GmbH (“Grünenthal”). Upon closing, the Nucynta Commercialization Agreement was effectively terminated and the Company’s only remaining royalty obligation is to pay 14% of net sales of the Nucynta Products directly to Grünenthal. Nucynta ER is an extended-release formulation of tapentadol that is indicated for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment, including neuropathic pain associated with diabetic peripheral neuropathy in adults, and for which alternate treatment options are inadequate. Nucynta IR is an immediate-release formulation of tapentadol that is indicated for the management of acute pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate in adults.

Belbuca, Symproic, and Elyxyb

On March 22, 2022 (the “Acquisition Date”), the Company acquired BioDelivery Sciences International, Inc. (“BDSI”), a specialty pharmaceutical company working to deliver innovative therapies for individuals living with serious and debilitating chronic conditions, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated as of February 14, 2022, by and among the Company, Bristol Acquisition Company Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Purchaser”), and BDSI, a Delaware corporation (the “BDSI Acquisition”). Upon closing, the Company acquired the Belbuca, Symproic, and Elyxyb products. The Company began shipping and recognizing product sales related to Belbuca, Symproic, and Elyxyb after the closing. Belbuca is a buccal film that contains buprenorphine, a Schedule III opioid, that was approved by the FDA in October 2015 for use in patients with pain severe enough to require daily, around-the-clock, long-term opioid treatment for which alternative options are inadequate. Symproic was approved by the FDA in March 2017 for the treatment of Opioid-Induced Constipation (“OIC”) in adult patients with chronic non-cancer pain, including patients with chronic pain related to prior cancer or its treatment who do not require frequent (e.g., weekly) opioid dosage escalation. Elyxyb was approved by the FDA in May 2020 for the acute treatment of migraine with or without aura in adults.

The Company’s operations are subject to certain risks and uncertainties. The principal risks include inability to continue successfully commercializing products, changing market conditions for products and development of competing products, changing regulatory environment and reimbursement landscape, product-related litigation, manufacture of

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adequate commercial inventory, inability to secure adequate supplies of active pharmaceutical ingredients, key personnel retention, protection of intellectual property, and patent infringement litigation.

The Company believes that its cash and cash equivalents at June 30, 2022, together with expected cash inflows from the commercialization of its products, will enable the Company to fund its operating expenses, debt service and capital expenditure requirements under its current business plan for at least one year from the date the consolidated financial statements were issued.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Collegium Pharmaceutical, Inc. (a Virginia corporation) and its subsidiaries. The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements.

In the opinion of the Company’s management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to fairly present the financial position of the Company as of June 30, 2022, and the results of operations and cash flows for the three and six months ended June 30, 2022 and 2021. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year.

The preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues, costs and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. Estimates in the Company’s consolidated financial statements include revenue recognition, including the estimates of product returns, units prescribed, discounts and allowances related to commercial sales of products, estimates of useful lives with respect to intangible assets, accounting for stock-based compensation, contingencies, impairment of intangible assets and tax valuation allowances. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates under different assumptions or conditions. The consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s most recently filed Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “Annual Report”).

Acquisitions

In a business combination, the acquisition method of accounting requires that the assets acquired and liabilities assumed be recorded as of the date of the acquisition at their respective fair values, with some exceptions. Assets acquired and liabilities assumed in a business combination that arise from contingencies are generally recognized at fair value. If fair value can be determined, the asset or liability is recognized; if fair value is not determinable, then no asset or liability is recognized. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Any excess of the purchase price (consideration transferred) over the estimated fair values of net assets acquired is recorded as goodwill. Transaction costs and costs to restructure the acquired company are expensed as incurred. The operating results of the acquired business are reflected in the Company’s consolidated financial statements after the date of the acquisition.

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Goodwill

Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in a business combination and is not amortized, but is subject to impairment testing at least annually or when a triggering event occurs that could indicate a potential impairment.

Research and Development Expenses

Research and development expenses have historically consisted of product development expenses incurred in identifying, developing, and testing product candidates. Product development expenses primarily consisted of labor, benefits, and related employee expenses for personnel directly involved in product development activities, fees paid to contract research organizations for managing clinical and non-clinical trials, and regulatory costs.

As of April 1, 2022, the Company focused entirely on commercial products rather than research and development and redirected resources from research and development activities. As such, there were no expenses incurred in research and development during the three months ended June 30, 2022.

Recently Adopted Accounting Pronouncements

New accounting pronouncements are issued periodically by the Financial Accounting Standards Board (“FASB”) and are adopted by the Company as required by the specified effective dates.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This ASU clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021 and may be applied prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company adopted this standard effective January 1, 2022 and the adoption did not have a material impact on the Company’s condensed consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU amends Accounting Standards Codification, or ASC, 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606. As a result of the amendments made by the ASU, it is expected that an acquirer will generally recognize and measure acquired contract assets and contract liabilities in a manner consistent with how the acquiree recognized and measured them in its pre-acquisition financial statements. The ASU’s amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption of the amendments is permitted, including adoption in an interim period. An entity that early adopts in an interim period should apply the amendments (i) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (ii) prospectively to all business combinations that occur on or after the date of initial application. The Company adopted this standard effective January 1, 2022 and the adoption did not have a material impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

Other recent accounting pronouncements issued, but not yet effective, are not expected to be applicable to the Company or have a material effect on the consolidated financial statements upon future adoption.

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3. Revenue from Contracts with Customers

The Company’s revenue to date is from sales of the Company’s products, which are primarily sold to wholesalers (“customers”), which in turn sell the product to pharmacies for the treatment of patients (“end users”).

Revenue Recognition

In accordance with ASC Topic 606, Revenue from Contracts with Customers, (“ASC 606”) the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the assets is one year or less.

Performance Obligations

The Company determined that performance obligations are satisfied, and revenue is recognized when a customer takes control of the Company’s product, which occurs at a point in time. This generally occurs upon delivery of the products to customers, at which point the Company recognizes revenue and records accounts receivable. Payment is typically received 30 to 90 days after satisfaction of the Company’s performance obligations.

Transaction Price and Variable Consideration

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer (“transaction price”). The transaction price for product sales includes variable consideration related to sales deductions, including (1) rebates and incentives, including managed care rebates, government rebates, co-pay program incentives, and sales incentives and allowances; (2) product returns, including return estimates; and, (3) trade allowances and chargebacks, including fees for distribution service fees, prompt pay discounts, and chargebacks. The Company will estimate the amount of variable consideration that should be included in the transaction price under the expected value method for all sales deductions other than trade allowances, which are estimated under the most likely amount method. These provisions reflect the expected amount of consideration to which the Company is entitled based on the terms of the contract. In addition, the Company made a policy election to exclude from the measurement of the transaction price all taxes that are assessed by a governmental authority that are imposed on revenue-producing transactions.

The Company bases its estimates of variable consideration, which could include estimates of future rebates, returns, and other adjustments, on historical data and other information. Estimates include: (i) timing of the rebates and returns incurred, (ii) pricing adjustments related to rebates and returns, and (iii) the quantity of product that will be rebated or returned in the future. Significant judgment is used in determining the appropriateness of these assumptions at each reporting period.

Provisions for rebates and incentives are based on the estimated amount of rebates and incentives to be claimed on the related sales. As the Company’s rebates and incentives are based on products dispensed to patients, the Company is required to estimate the expected value of claims at the time of product delivery to wholesalers. Given that wholesalers sell the product to pharmacies, which in turn dispense the product to patients, claims can be submitted significantly after

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the related sales are recognized. The Company’s estimates of these claims are based on the historical experience of existing or similar programs, including current contractual and statutory requirements, specific known market events and trends, industry data, and estimated distribution channel inventory levels. Accruals and related reserves required for rebates and incentives are adjusted as new information becomes available, including actual claims. If actual results vary, the Company may need to adjust future estimates, which could have an effect on earnings in the period of the adjustment.

Provisions for trade allowances and chargebacks are primarily based on customer-level contractual terms. Accruals and related reserves are adjusted as new information becomes available, which generally consists of actual trade allowances and chargebacks processed relating to sales recognized.

Provisions for product returns are based on product-level returns rates, recent unprocessed return claims, as well as relevant market events and other factors. Estimates of the future product returns are made at the time of revenue recognition to determine the amount of consideration to which the Company expects to be entitled (that is, excluding the products expected to be returned). To the extent the Company receives amounts in excess of what it expects to be entitled to receive due to a product return, the Company does not recognize revenue when it transfers products to customers but instead recognizes those excess amounts received as a refund liability. The Company updates the measurement of the refund liability at the end of each reporting period for changes in expectations about the amount of refunds with the corresponding adjustments recognized as revenue (or reductions of revenue).

Historically, estimates of the refund liability for Xtampza product returns were based on a combination of historical actual returns processed to date, taking into consideration the expiration date of product upon delivery to customers, as well as forecasted customer buying and return patterns, channel inventory levels, and other specifically known market events and trends. Sales of Xtampza increased significantly starting in 2018; as a result, the majority of Xtampza sold to customers by the Company had not been eligible for return until the year ended December 31, 2021, or beyond. For the Nucynta Products, estimates of the refund liability for product returns were based on historical returns rates as these products have been commercially sold in the U.S. since 2009 for Nucynta IR and since 2011 for Nucynta ER. Because the Company began selling the Nucynta Products in 2018, most of the Nucynta Products sold to customers by the Company were not eligible for return until the year ended December 31, 2021, or beyond.

The Company provides the right of return to its customers for an 18-month window beginning six months prior to expiration and up until twelve months after expiration. The Company’s customers short-pay an existing invoice upon notice of a product return claim. Adjustments to the preliminary short-paid claims are processed when the return claim is validated and finalized. For Xtampza and the Nucynta Products, the Company’s return policy requires that product is physically returned within the 18-month window.

2021 Returns Adjustment

During the year ended December 31, 2021, there were unprecedented and significant disruptions in the processing of product returns. Specifically, the Company’s customers, via the third-party returns processor that they and many pharmacies engage to process the majority of the Company’s product returns, failed to return products to the Company in the ordinary course. The value of actual returned product during the year ended December 31, 2021 represented less than 20% of the value of the product returns claimed during that period. Due to the failure of the customers and their vendor to return product timely in the ordinary course, the Company did not physically receive returned products corresponding to the substantial majority of the returns claimed and could not validate or finalize customer return claims, nor determine if the return was or would be eligible for refund upon the physical return. The lack of timely processing of requested product returns obscures information related to the validation of product returns and increases uncertainty related to the actual volume of product that will be physically returned and credited in accordance with the Company’s returns policy.

During the fourth quarter of 2021, after significant and sustained efforts with customers to resolve the unprocessed return claims, the Company formally denied a significant portion of these claims under the Company’s return policy. The Company subsequently received payment for only a portion of the denied claims and intends to vigorously pursue collections of the full amount of these short-pay receivables. Additional unprocessed return claims have and are expected to continue to expire prior to their physical return.

Although the Company has denied and expects to continue to deny credit for product returns that are not in accordance with its return policy, uncertainty exists related to the ultimate resolution of these claims. At the end of each reporting

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period, the Company updates the estimated transaction price (including updating its assessment of whether an estimate of variable consideration is constrained) to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period. Variable consideration, including the risk of customer concessions, is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is subsequently resolved. In particular, resolution of the unprocessed return claims includes the risk of concession for those that are outside of the Company’s return policy. There were no material adjustments related to these estimates in the three and six months ended June 30, 2022.

Significant judgment is required to determine the variable consideration included in the transaction price as described above. Adjustments to the estimated variable consideration included in the transaction price occurs when new information indicates that the estimate should be revised. If the value of accepted and processed claims is different than the amount estimated and included in variable consideration, then adjustments would impact product revenue, net and earnings in the period such revisions become known. The amount of variable consideration ultimately received and included in the transaction price may materially differ from the Company’s estimates, resulting in additional adjustments recorded to increase or decrease product revenue, net.

Summary of Activity in Product Revenue Provision and Allowance Categories

The following tables summarize activity in each of the Company’s product revenue provision and allowance categories for the six months ended June 30, 2022 and 2021:

    

Trade

Rebates and

Product

Allowances and

Incentives (1)

Returns (2)

Chargebacks (3)

Balance at December 31, 2021

$

142,379

$

54,617

$

13,226

Acquired from BDSI

38,074

18,187

7,575

Provision related to current period sales

233,089

16,675

59,211

Changes in estimate related to prior period sales

(481)

(37)

Credits/payments made

(244,356)

(11,465)

(52,939)

Balance at June 30, 2022

$

168,705

$

78,014

$

27,036

    

    

Trade

Rebates and

Product

Allowances and

Incentives (1)

Returns (2)

Chargebacks (3)

Balance at December 31, 2020

$

132,775

$

23,779

$

19,055

Provision related to current period sales

179,571

7,491

42,059

Changes in estimate related to prior period sales

(441)

Credits/payments made

(178,508)

(21,443)

(33,764)

Balance at June 30, 2021

$

133,397

$

9,827

$

27,350

(1)Provisions for rebates and incentives includes managed care rebates, government rebates and co-pay program incentives. Provisions for rebates and incentives are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s Consolidated Balance Sheets.
(2)Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s Consolidated Balance Sheets.
(3)Provisions for trade allowances and chargebacks include fees for distribution service fees, prompt pay discounts, and chargebacks. Trade allowances and chargebacks are deducted from gross revenue at the time revenues are recognized and are recorded as a reduction to accounts receivable in the Company’s Consolidated Balance Sheets.

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As of June 30, 2022, the Company did not have any transaction price allocated to remaining performance obligations and any costs to obtain contracts with customers, including pre-contract costs and set up costs, were immaterial.

Disaggregation of Revenue

The Company discloses disaggregated revenue from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. When selecting the type of category to use to disaggregate revenue, the Company considers how information about the Company’s revenue has been presented for other purposes as well as what information is regularly reviewed and used for evaluating financial performance. As such, the Company disaggregates its product revenue, net from contracts with customers by product, as disclosed in the table below.

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Belbuca

$

42,301

$

$

45,611

$

Xtampza ER

33,190

    

33,023

64,708

68,432

Nucynta IR

26,554

29,241

55,889

59,767

Nucynta ER

17,077

20,678

36,340

42,464

Symproic

3,860

4,160

Elyxyb

109

134

Other

458

458

Total product revenues, net

$

123,549

$

82,942

$

207,300

$

170,663

The Company began recognizing revenue from net product sales of Belbuca, Symproic, and Elyxyb following the Acquisition Date.

4. Acquisitions

On March 22, 2022, the Company closed the BDSI Acquisition pursuant to the Merger Agreement, with BDSI surviving the Merger as a wholly owned subsidiary of the Company. The BDSI Acquisition was completed to leverage the Company’s existing sales force and other operations to commercialize additional products that are typically marketed to similar physicians and to develop other synergies. The Company obtained control through the acquisition of shares in an all-cash transaction which closed on March 22, 2022.

The total consideration paid for the BDSI acquisition was approximately $669.4 million consisting of the following (in thousands, except per share amounts):

Fair Value of Purchase Price Consideration

Amount

Fair value of purchase price consideration paid at closing:

Cash consideration for all outstanding shares of BDSI's common and preferred stock (103,235,298 shares acquired at $5.60 per share)

$

578,118

Cash consideration paid to settle RSUs and in-the-money options

28,309

Cash paid to settle BDSI debt

63,004

Total purchase consideration

$

669,431

The Company has accounted for the BDSI Acquisition as a business combination and, accordingly, has included the assets acquired, liabilities assumed and results of operations in its financial statements following the Acquisition Date.

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The preliminary purchase price allocation is based on estimates, assumptions, valuations and other studies which have not yet been finalized. Prior to the finalization of the purchase price allocation, if information becomes available that would indicate it is probable that unknown events had occurred and the amounts can be reasonably estimated, such items will be included in the final purchase price allocation and may change the carrying value of goodwill. The Company is finalizing its valuation of intangible assets, tangible assets, liabilities and tax analyses, and anticipates finalizing the purchase price allocation as the information necessary to complete the analysis is obtained, but no later than one year after the Acquisition Date. During the quarter ended June 30, 2022, the Company recorded measurement period adjustments to increase inventory by $14,300, decrease intangible assets by $10,000, increase accrued rebates, returns and discounts by $3,916, increase prepaid expenses and other current assets by $888, decrease accrued expenses by $502, and increase deferred tax liabilities by $356, with a net offsetting decrease to goodwill of $1,418.

The following tables set forth the preliminary allocation of the BDSI Acquisition purchase price to the estimated fair value of the net assets acquired at the Acquisition Date (in thousands):

Amounts Recognized at the Acquisition Date

Assets Acquired

Cash and cash equivalents

$

97,362

Accounts receivable

55,495

Inventory

77,382

Prepaid expenses and other current assets

6,125

Property and equipment

1,242

Operating lease assets

481

Intangible assets

435,000

Total assets

$

673,087

Liabilities Assumed

Accounts payable

$

12

Accrued expenses

18,115

Accrued rebates, returns and discounts

56,261

Operating lease liabilities

481

Deferred tax liabilities

58,881

Total liabilities

$

133,750

Total identifiable net assets acquired

539,337

Goodwill

130,094

Total consideration transferred

$

669,431

The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs. The Company used an income approach to value the $435,000 of intangible assets. The valuation for each of these intangible assets was based on estimated projections of expected cash flows to be generated by the assets, discounted to the present value at discount rates commensurate with risk. The Company is amortizing the identifiable intangible assets on a straight-line over their respective useful lives (refer to Note 9, Goodwill and Intangible Assets). In addition, the acquired inventory was recognized at its acquisition-date fair value, which resulted in an increase of $54,700 compared to its preacquisition book value.

The excess of the purchase price over the fair value of identifiable net assets acquired represents goodwill. This goodwill is primarily attributable to synergies of merging operations. The acquired goodwill is not deductible for tax purposes.

Total revenues attributable to BDSI from the Acquisition Date through June 30, 2022 were $50,362. However, earnings attributable to BDSI from the Acquisition Date through June 30, 2022 are not distinguishable due to the rapid integration of BDSI’s core operations into the Company.

Unaudited Pro Forma Summary of Operations

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The following table shows the unaudited pro forma summary of operations for the three and six months ended June 30, 2022 and 2021, as if the BDSI Acquisition had occurred on January 1, 2021. This pro forma information does not purport to represent what the Company’s actual results would have been if the acquisition had occurred as of January 1, 2021, and is not indicative of what such results would be expected for any future period (in thousands, except per share amounts):

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

    

2022

2021

Total revenues

$

123,549

$

124,380

$

236,651

$

253,121

Net (loss) income

$

1,238

$

63,824

$

(18,950)

$

24,814

The unaudited pro forma financial information was prepared using the acquisition method of accounting and was based on the historical financial information of the Company and BDSI. The summary pro forma financial information primarily reflects the following pro forma adjustments:

The Company’s acquisition related transaction costs of $14,718 were reflected as of January 1, 2021
Employee severance related expense of $8,008 was reflected as of January 1, 2021
Additional amortization expense from the acquired intangibles
Additional cost of product revenues related to the step-up basis in inventory to record inventory at fair value; and
Adjustments to the Company’s interest expense related to repayment of the 2020 Term Notes and entering into the 2022 Term Loan as defined in Note 11, Term Notes Payable.

In addition, all of the above adjustments were adjusted for the applicable tax impact.

Acquisition Related Expenses

In the three and six months ended June 30, 2022, the Company incurred $3,579 and $30,746, respectively, of acquisition related expenses as a result of the BDSI Acquisition and the substantial majority were included in the Selling, general, and administrative expense in the condensed consolidated statements of operations. These costs include transaction costs, which primarily consisted of financial advisory, banking, legal, and regulatory fees, and other consulting fees, incurred to complete the acquisition; employee-related expenses (severance cost and benefits) for terminated employees after the acquisition, BDSI directors and officers insurance, and miscellaneous other acquisition expenses incurred. The Company has accrued $848 related to employee severance costs incurred as of June 30, 2022 but not yet paid. Additional charges related to severance or retention payments and payments of any remaining employee termination costs are not expected to be material. However, the Company expects to incur additional acquisition related expenses relating to consulting fees, contract termination costs, and other integration-related expenses during the remainder of 2022.

Three Months Ended

June 30, 2022

Six Months Ended

June 30, 2022

Transaction costs

$

161

$

14,718

Employee-related expenses

1,389

8,008

BDSI directors and officers insurance

4,492

Other acquisition expenses

2,029

3,528

Total acquisition related expenses

$

3,579

$

30,746

5. License Agreements

The Company periodically enters into license agreements to develop and commercialize its products.

Dr. Reddy’s acquired product rights

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Prior to the BDSI Acquisition, BDSI and Dr. Reddy’s Laboratories Limited (“DRL”), entered into an asset purchase agreement (the “Elyxyb Asset Purchase Agreement”) for the acquisition by BDSI from DRL of certain patents, trademarks, regulatory approvals and other rights related to Elyxyb and its commercialization in the United States and Canada (the “DRL Territory”).

Pursuant to the terms of the Elyxyb Asset Purchase Agreement, a $9,000 payment is due to DRL on August 3, 2022. In addition, up to an additional $9,000 of payments are due to DRL upon achievement of certain regulatory milestones as well as for quarterly earn-out payments on potential sales of the Elyxyb Product in the DRL Territory that range from high single digits to the low double digits (subject to reduction in certain circumstances) of net sales based on volume of sales. DRL will also be entitled to one-time payments upon the achievement of six escalating sales milestones, which range from $4,000 to be paid upon the achievement of $50,000 in net sales in a calendar year to $100,000 to be paid upon the achievement of $1,000,000 in net sales in a calendar year up to a total of $262,000.

Shionogi license and supply agreement

Prior to the BDSI Acquisition, BDSI and Shionogi Inc. (“Shionogi”) entered into an exclusive license agreement (the “Shionogi License Agreement”) for the commercialization of Symproic in the United States including Puerto Rico (the “Shionogi Territory”) for opioid-induced constipation in adult patients with chronic non-cancer pain (the “Shionogi Field”).

Pursuant to the terms of the Shionogi License Agreement, tiered royalty payments on net sales of Symproic in the Shionogi Territory are payable quarterly based on a royalty rate that ranges from 8.5% to 17.5% (plus an additional 1% of net sales on a pass-through basis to a third-party licensor of Shionogi) based on volume of net sales and whether Symproic is being sold as an authorized generic. Unless earlier terminated, the Shionogi License Agreement will continue in effect until the expiration of the royalty obligations, as defined therein. Upon expiration of the Shionogi License Agreement, all licenses granted for Symproic in the Shionogi Field and in the Shionogi Territory survive and become fully-paid, royalty-free, perpetual and irrevocable.

BDSI and Shionogi also had entered into a supply agreement under which Shionogi will supply Symproic at cost plus an agreed upon markup. In the event that Symproic is sourced from a third-party supplier, Shionogi would continue to supply naldemedine tosylate for use in Symproic manufacturing at cost plus such agreed upon markup for the duration of the Shionogi License Agreement.

6. Earnings Per Share

Basic earnings per share is calculated by dividing the net (loss) income by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted earnings per share is computed by dividing the net (loss) income by the weighted-average number of shares of common stock, plus potentially dilutive securities outstanding for the period, as determined in accordance with the treasury stock, if-converted, or contingently issuable accounting methods, depending on the nature of the security. For purposes of the diluted earnings per share calculation, stock options, restricted stock units (“RSUs”), performance share units (“PSUs”),

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and shares potentially issuable in connection with our employee stock purchase plan and convertible senior notes are considered potentially dilutive securities and included to the extent that their addition is not anti-dilutive.

The following table presents the computations of basic and dilutive earnings per common share:

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

    

2022

2021

Numerator:

Net (loss) income

$

(5,191)

$

72,843

$

(18,260)

$

88,505

Adjustment for interest expense recognized on convertible senior notes:

1,168

2,333

Net (loss) income - diluted

$

(5,191)

$

74,011

$

(18,260)

$

90,838

Denominator:

Weighted-average shares outstanding — basic

34,001,553

    

35,302,608

33,838,638

    

35,128,144

Effect of dilutive securities:

Stock options

580,329

624,602

Restricted stock units

302,737

384,908

Performance share units

Employee stock purchase plan

125

1,149

Warrants

175,920

187,812

Convertible senior notes

4,925,134

4,925,134

Weighted average shares outstanding — diluted

34,001,553

41,286,853

33,838,638

41,251,749

(Loss) earnings per share — basic

$

(0.15)

$

2.06

$

(0.54)

$

2.52

(Loss) earnings per share — diluted

$

(0.15)

$

1.79

$

(0.54)

$

2.20

The Company has the option to settle the conversion obligation for its convertible senior notes due in 2026 in cash, shares or a combination of the two. The Company uses the if-converted method for the convertible senior notes.

The following table presents dilutive securities excluded from the calculation of diluted earnings per share:

Three Months Ended June 30,

Six Months Ended June 30,

2022

 

2021

 

2022

 

2021

Stock options

2,230,895

1,416,696

2,230,895

1,415,431

Restricted stock units

2,024,634

677,824

2,024,634

677,824

Performance share units

447,770

392,220

447,770

392,220

Employee stock purchase plan

Warrants

1,041,667

1,041,667

Convertible senior notes

4,925,134

4,925,134

For PSUs, these securities were excluded from the calculation of diluted earnings per share as the performance-based or market-based vesting conditions were not met as of the end of the reporting period. All other securities presented in the table above were excluded from the calculation of diluted earnings per share as their inclusion would have had an antidilutive effect.

7. Fair Value of Financial Instruments

Disclosures of fair value information about financial instruments are required, whether or not recognized in the balance sheet, for financial instruments with respect to which it is practicable to estimate that value. Fair value measurements and

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disclosures describe the fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, as follows:

Level 1 inputs:

Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 inputs:

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 inputs:

Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability

Transfers are calculated on values as of the transfer date. There were no transfers between Levels 1, 2 and 3 during the six months ended June 30, 2022 and 2021.

The following tables present the Company’s financial instruments carried at fair value using the lowest level input applicable to each financial instrument at June 30, 2022 and December 31, 2021:

Significant

Quoted Prices

other

Significant

in active

observable

unobservable

markets

inputs

inputs

    

Total

    

(Level 1)

    

(Level 2)

    

(Level 3)

June 30, 2022

Money market funds, included in cash equivalents

$

2,006

$

2,006

$

$

December 31, 2021

Money market funds, included in cash equivalents

$

45,078

$

45,078

$

$

The Company’s cash equivalents, which consist of money market funds, are measured at fair value on a recurring basis

using quoted market prices. Accordingly, these securities are categorized as Level 1.

The Company’s convertible senior notes fall into the Level 2 category within the fair value level hierarchy. The fair value was determined based on data points other than quoted prices that are observable, either directly or indirectly, such as broker quotes in a non-active market. As of June 30, 2022, the convertible senior notes had a fair value of

approximately $119,492 and a net carrying value of $140,415.

The Company’s term notes fall into the Level 2 category within the fair value level hierarchy and the fair value was

determined using quoted prices for similar liabilities in active markets, as well as inputs that are observable for the liability (other than quoted prices), such as interest rates that are observable at commonly quoted intervals. As of June 30, 2022, the outstanding principal balance of the term notes of $625,000 reasonably approximated the estimated fair value.

As of June 30, 2022, and December 31, 2021, the carrying amounts of the cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, and accrued rebates, returns and discounts reasonably approximated their estimated fair values.

8. Inventory

Inventory as of June 30, 2022 and December 31, 2021 consisted of the following:

June 30,

December 31,

2022

2021

Raw materials

$

7,914

$

3,685

Work in process

46,427

1,007

Finished goods

23,428

12,702

Total inventory

$

77,769

$

17,394

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The aggregate charges related to excess inventory for the three and six months ended June 30, 2022 and 2021 were immaterial. These expenses were recorded as a component of cost of product revenues. 

9. Goodwill and Intangible Assets

The following tables summarizes the changes in the carrying amount of Goodwill:

Amount

Balance at December 31, 2021

$

Goodwill resulting from BDSI Acquisition

130,094

Balance at June 30, 2022

$

130,094

The Company’s goodwill resulted from the BDSI Acquisition. During the three months ended June 30, 2022, goodwill increased by $1,418 due to measurement period adjustments associated with the BDSI Acquisition. Refer to Note 4, Acquisitions.

The following table sets forth the cost, accumulated amortization, and carrying amount of intangible assets as of June 30, 2022 and December 31, 2021:

As of June 30, 2022

As of December 31, 2021

Amortization Period
(Years)

Cost

Accumulated Amortization

Carrying Amount

Cost

Accumulated Amortization

Carrying Amount

Belbuca

4.8

$

360,000

$

(20,733)

$

339,267

$

$

$

Nucynta Products

8.0

521,170

(286,038)

235,132

521,170

(252,447)

268,723

Symproic

9.6

70,000

(2,003)

67,997

Elyxyb

14.2

5,000

(97)

4,903

Total intangibles

$

956,170

$

(308,871)

$

647,299

$

521,170

$

(252,447)

$

268,723

The following table presents amortization expense recognized in cost of product revenues for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30,

Six Months Ended June 30,

2022

 

2021

2022

 

2021

Belbuca

$

18,796

    

$

$

20,733

    

$

Nucynta Products

16,796

16,795

33,591

33,590

Symproic

1,821

2,003

Elyxyb

88

97

Total amortization expense

$

37,501

$

16,795

$

56,424

$

33,590

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As of June 30, 2022, the remaining amortization expense expected to be recognized is as follows:

Years ended December 31,

Belbuca

Nucynta Products

Symproic

Elyxyb

Total

2022

$

37,695

$

33,590

$

3,643

$

176

$

75,104

2023

75,393

67,181

7,285

352

150,211

2024

75,393

67,181

7,285

352

150,211

2025

75,393

67,180

7,285

352

150,210

2026

75,393

7,285

352

83,030

Thereafter

35,214

3,319

38,533

Remaining amortization expense

$

339,267

$

235,132

$

67,997

$

4,903

$

647,299

10. Accrued Expenses

Accrued expenses as of June 30, 2022 and December 31, 2021 consisted of the following: